Netflix (NFLX -0.86%) could be staring down a subscriber collapse. A consumer survey indicates that 25% of the streaming giant's members may be planning to dump their subscription this year, and if they actually follow through, it would be disastrous for the business.

But how likely is that to happen? Although the streaming service suffered back-to-back periods of subscriber losses in the first two quarters of the year -- and its first decline in more than a decade -- the streamer also promised it will rebound in the third quarter and regain virtually all those who fled. So which way could things go for subscriptions?

Man watching TV and covering eyes.

Image source: Getty Images.

A lack of perceived value

Results from a Review.org survey of 1,000 Americans in August found one out of four plan to drop Netflix this year. With almost 74 million subscribers in the U.S. and Canada at the end of the second quarter, a 25% loss would represent about 18 million subscribers at a cost of approximately $272 million in revenue.

The biggest reason cited for abandoning the streamer is cost. Netflix hiked its basic subscription plan in January to $10 a month, while the standard plan went up to $15.50 a month, and the premium plan rose to $20, amounting to increases of 11%, 20%, and 25%, respectively. These price hikes also mean Netflix has the highest average plan cost among all major streaming services.

Some subscribers feel the streaming service is just no longer worth the money. Fully 30% of survey respondents said Netflix no longer has the content they want to watch. That's not actually so different from what others have found. A Whip Media report said Netflix ranked dead last in perceived value among nine different streaming services.

Forbes recently pointed out that almost all of Netflix top 10 movies and TV shows have "rotten" audience scores on Rotten Tomatoes.

People are still tuning in

Yet, as much as subscribers chafe under the high cost, low-quality programming on Netflix, it remains the most popular streaming service by far and is the one service most streaming subscribers would keep above all others. Variety reported 31% of users said Netflix was the one service they would keep compared to 19% who said Warner Bros Discovery's HBO Max was a keeper and the 17% willing to maintin Hulu, which is jointly owned by Disney and Comcast.

Consumers subscribe to an average of four different streaming services, and Netflix remains the most popular service being found in approximately three quarters of all U.S. households. It is watched far more than any other, including Amazon Prime Video, which people don't really subscribe to for the movies anyway.

Because there is such a glut of streaming services, we may see a shakeout in the future. Disney, for example, is considering folding Hulu into Disney+ when it finally acquires Comcast's stake in 2024 (if an acquisition doesn't occur sooner), and Warner Bros may fold Discovery+ into HBO Max.

The rise of low-cost services, though, has forced Netflix to introduce an ad-supported subscription tier at a relative discount beginning Nov. 1. While users who might otherwise cancel because of high prices could end up trading down, it might also result in Netflix cannibalizing its higher subscription tiers.

Netflix is also cracking down on account-sharing and is beginning to charge for households using an account outside of the primary residence, forcing people to subscribe who previously didn't. However Cowen & Co. estimates Netflix could generate $1.6 billion in incremental revenue by eliminating account sharing globally.

Take a wait-and-see approach

Netflix is at a crossroads, and while many are forecasting it could lose several million subscribers this year, it is nowhere near the nuclear-winter levels the consumer survey indicates. Moreover, the other estimates see 2022 just being an anomaly, with subscriber tallies expected to begin growing again in 2023.

Investors might still want to use caution. At 23 times trailing earnings and next year's estimates, and at more than 200 times the free cash flow it produces, Netflix isn't a cheap stock for a company whose business is in serious flux. The streaming giant still needs to adjust to the massive growth of competition it now faces, and that could take time to finally figure out.